NICE: Lagos Chapter

Engineers in a Recession Economy:

Challenges and Remedies

Presented by

Engr. Emeka B. Ibeh, MNSE MNICE M.ASCEDecember 2016

Nigerian Institution of Civil EngineersLagos Chapter

NICE: Lagos Chapter

� INTRODUCTION

� Genesis of the Nigerian Recession.

� Impact on the Engineering Ecosystem

� Remedial Measures

� Conclusion

� Strategy for 2017

OUTLINE

NICE: Lagos Chapter

Introduction

The International Monetary Fund (IMF) and the

Central Bank of Nigeria (CBN) have officially

declared that Nigeria is in Economic Recession

and may not regain stability anytime soon. The

reality of this recession affects all strata of the

Nations productive workforce including

Engineering personnel. It is our intention to X-Ray

the issues fueling the recession problem and

recommend viable solutions.

NICE: Lagos Chapter

Problem Definition

• RECESSION: a period of temporary economic decline

during which trade and industrial activity are reduced,

generally identified by a fall in GDP in two successive

quarters.

• ECONOMY: The state of a country or region in terms of

the production and consumption of goods and services

and the supply of Money.

� REMEDIES: Solutions to an undesirable situation.

� ENGINEERS: Those who develop economic and safe

solutions to practical problems by applying math, science

and ingenuity.

NICE: Lagos Chapter

Genesis of the Nigerian Economic

Recession

• Inability of the Productive Sector to access

FOREX

• Over-dependence on Oil(poor diversification)

• High inflation rate

• Poor Economic planing and Policy conflicts

• High Interest Rates

• High level of Unemployment

NICE: Lagos Chapter

Genesis of the Nigerian Economic

Recession

• Poor Economic Planning and policy

conflicts collude with high interest rates

to erode investor confidence leading to a

winding down of the productive sector

and the resultant scarcity of foreign

exchange presently gripping the Nigerian

Economy.

• A stagnating productive sector fuels the

country’s unemployment problem as

company’s seek measures to cut

overhead costs.

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Impact on the Engineering Ecosystem

• Increased unemployment for both practicing

and graduate Engineers.

• Credit Crunch: Banks are unwilling/Unable for

fund Large long term Engineering Projects.

• Reduced Interest in study of Engineering in

Higher Institutions: due to perceived scarce

employment opportunities

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Impact on the Engineering Ecosystem:

Retrenchment

� Reduce fixed costs,

� Narrow product offerings

� Reduce staffing

� Trim expenditure such as Training,

Marketing and RandD

Companies seem to be applying a retrenchment

approach to business strategy which aim to:

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Impact on the Engineering Ecosystem:

Resilient Sectors

� Building Engineering firms,

� Project Management firms,

� Costing Engineering (QS) firms.

In the case of Multidisciplinary firms, the likelihood isthat the spread of activity across many constructionsectors provide better resilience to the current recessionwhen compared with specialist firms; these are:

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Remedial Measures

• Effective Business Strategy

• Attraction of FDI’S

• Effective Spending

• Reduction in Tax rates

• Enhanced Access To Credit

• Economic Stabilization Emergency Bill (ESEB)

• Engineering Innovation

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Remedial Measures: Effective

Business Strategy

• Retrenchment(Most Common)

� Cutting operating costs

� Divestment of non-core assets, closure of plants, reduction

in employment

• Investment� Expenditure in advantageous innovation

� Market diversification

• Ambidextrous� A combination of Retrenchment and Investment Strategy

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Remedial Measures:Attraction of

FDI’S

• Brownfield FDI’S: Investment (in

Dollars) into existing public assets.

• Greenfield FDI’S : Investment in form

of PPP into new public infrastructure.

• Diaspora FDI’S: Investment in

infrastructural development by

Nigerian In Diaspora.

• All FDI sources require government to

create the enabling environment to

nurture and maintain investor

confidence.

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Remedial Measures: Attraction of FDI’S

“The MELES WAY”

• Meles Zenawi(prime minister 1995 to

2012) structured Ethiopian Economy

effectively to achieve a GDP above

10%; some benefits include:

• Revenue yield from coffee rose from

10% to 70% of international value

• Attracted FDI from Nigeria via Dangote

Cement using electricity guarantee of

N15/kwh resulting in 60% drop in

Ethiopian Cement Cost.

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Remedial Measures: ESEB

•� Proposed Bill to accelerate recession

recovery

� Shall seek to create a coherent

investment climate

� Structured to favour the public

procurement act

Economic Stabilization Emergency Bill

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Remedial Measures: Engineering

Innovation

• Government must actively pursue skill

acquisition by its citizenry at all levels

• The Engineering community should

make greater effort to enshrine the

innovation culture amongst its

membership.

• Engineering graduates should be

equipped with marketable skills to

arrest the increasing rate of

unemployment amongst this cadre of

Engineering Community

• Agricultural Skills acquisition should be

made free as a matter of policy

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Conclusion

• For Nigeria to resolve the present economic recession

Government must create a coherent investment

environment to attract FDI’S as successfully applied by

developing countries such as Ethiopia

• The Engineering Community must give Engineering

innovation its pride of place as an indispensable catalyst

to economic diversification and progress

• Engineering Companies must adopt the most effective

business strategy to ensure survival during this economic

recession.

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1. Agriculture is the way to go for Engineers in

2017 and integrated (Zero Waste) method is best.

2. Engineers interested in forming must build in

the potential end users directly into the business model

as reliance on middle men is the best recipe for failure

3. Engineer must learn to come together into

effective partnerships.

4. Agriculture should be left to Agricultural Engineers while Civil

Engineers should remain in their profession as the opportunities

Within it a limitless.

5.The Qualities of Engineering Graduates from the countries

higher institution has to be improves to make them relevant

to their chosen profession.

Strategy for 2017:

Audience Comments

NICE: Lagos Chapter

6. Engineer should acquire soft skills like marketing,

Sales seek effective means of advertising their acquired

skills.

7. NSE, NICE should fashion out effective engineering

Skills acquisition programs.

8. Infrastructural development is indispensable to

The country’s drive to come out of economic

Recession as only functional infrastructure can

Drive economic growth.

9. Civil Engineers must pursue continuous professional

Development (CPD) to remain both locally and

Internationally competent.

10.The country is in economic recession partly because

The Local Engineers are not effective in infrastructure

delivery.

Strategy for 2017:

Audience Comments

NICE: Lagos Chapter

References

1. The Lagos Chamber of Commerce and Industry. 2016. “Steering The

Nigerian Economy out of Recession”.

2. Construction Industry Council, UK. 2009. “The Impact of the Recession

on Construction Professional Services”.

3. Glynn Lowth, Malcolm Prowle, Michael Zhang. 2010.“The impact of

economic recession on business strategy planning in UK

companies”

4. The Royal Academy of Engineering. 2015. “Engineering for a successful

nation”.

5. http://www.werbos.com/E/How_to_Avoid_Depression.pdf. “How to

Avoid A Second, Deeper Recession: An Engineering Approach”.

6. Wikipedia online encyclopedia. 2016. “http://en.wikipedia.org”

7. Google Definition. 2016. “http://www.google.com.ng”

8. http://educacinfo.com/economic-recession-nigeria. 2016. Economic

Recession in Nigeria: Causes and Solutions